Which of the following is a cost of economic growth related to how gains are distributed?

• A. Environmental damage
• B. Demerit goods
• C. Unequal distribution of gains
• D. Population growth

Answer: (C)

When an economy grows, total output rises, but the important point is how the extra gains are shared. The cost described here is the unequal distribution of gains: the benefits of growth accrue to some groups much more than others, so living standards improve for many while a significant portion may see little or no improvement. This distributional issue can reduce overall welfare, create social tensions, and prompt calls for redistribution or policy intervention to spread the gains more broadly.

Environmental damage, demerit goods, and population growth are different kinds of concerns and aren’t specifically about how the gains from growth are shared.